Offering a summary of the proposed Fiscal Year 2012-2013 Budget, Seven Lakes Landowners Association [SLLA] Treasurer Conrad Meyer addressed a handful of residents during a Town Hall meeting on Wednesday, January 31.
The proposed budget was prepared by Community Manager Alina Cochran, and carefully reviewed by Finance Committee members Ed Sanchez, Jim Allen, and George Temple. The SLLA Board of Directors will also review the proposed budget before a motion for approval is called during the February 29 Open Meeting.
Looking for public input and comment, Meyer said the Finance Committee is open to good ideas and welcomed any feedback.
Anticipated Income
At $1,343,316 the total anticipated income for FY 2013 is slighter lower than last year’s income of $1,374,593.
Assessments — including annual dues, assessment penalties, and renter’s fees — make up the bulk of income at $1,282,716, which is also slightly lower than last year’s assessment income of $1,291.893.
The Board is moving to replace renter's dues with a lower administrative fee charged to renter. As a result, anticipated renter’s administrative fees for FY 2013 are $9,600, versus this year’s take of $34,440 in renter’s dues.
Another notable decrease in the budget is anticipated interest from the operating and reserve accounts, with an overall reduction from $15,500 in FY2012 to $6,900 in FY2013.
“In last year’s budget, we were overly optimistic of how much interest would accumulate,” explained Meyer.
The proposed budget also anticipates decreases guest fees, facility rental fees, and plan review fees, lowering anticipated income from $67,200 in FY2012 to $53,700 for FY2013.
For a second consecutive year, the SLLA Summer Day Camp was not profitable, due to decreased attendance, with total expenses running $4,300, versus anticipated income of $2,000. As recommended by the Recreation Committee, the program will not be continued.
Anticipated Expenses
Total anticipated operating expenses show a slight increase from last year, upping the total to $1,140,725 in FY2013, with $202,591 set aside to invest in reserves.
Administrative costs will increase from $567,128 to $586,571, a change that reflects a two percent merit increase in salaries for employees with over a year employment history with SLLA, as well as a slight increase in group insurance rates, taxes and administrative costs, and contributions to IRA and 401K plans. In addition, the salary increase covers the cost of one additional half-time employee for the maintenance department.
Security service expenses are reduced by nearly $6,000 with The Budd Group contract; plus, another $3,000 in savings is anticipated because of the recent decision to no longer issue daily hang-tags for guests. Instead, guests must check-in at the gates and license plate information will be recorded as usual.
Maintenance expenses are anticipated to increase $26,000 from last year, due in part to the additional staff member, but also because of a $10,000 increase in the cost to remove material from the Yard Debris Site
“We have been looking at alternatives to saving money [at the Debris Site], but nothing has panned out," Meyer explained. "This is a popular amenity, so we don’t want to close it; but it would really help if people followed the rules.”
Dam Maintenance expenses are expected to jump significantly, from $3000 to $10,000. Recreation expenses are also slightly up and reflect an increase in pool equipment and horse feed costs.
Administrative expenses include a decrease in the annual audit fee and an increase in the management contract from $159,996 to $164,304 in FY2013.
Anticipated collection fees jumped from $0 to $6,000; Meyer said the anticipated increase in income from collections will cover the additional cost.
Anticipated Reserves
The FY2013 includes a transfer of $131,000 into restricted reserves for road paving and state-mandated dam repairs. An additional $71,591 will be set aside in unrestricted reserves.
The amount available for unrestricted reserves is determined by whatever is left over once all income is collected and all expenses are paid. The proposed budget anticipates that will amount to $202,591 — nearly $90,000 less than last year’s reserve contribution and a third lower than the Reserve Study’s recommendation of $300,000 to be set aside in the coming year.
If approved as proposed, the budget for the coming year will include a total unrestricted balance of $498,606, of which $235,635 is set aside as emergency fundingleaving a total of $262,971 in available unrestricted reserves.
Projects recommended by the Reserve Study for FY2013 — but not yet approved by the Board — include $98,640 to install a toe drain at Lake Sequoia; $22,605 in stables renovation; $124,579 for bulkhead work at Sequoia Island; $77,915 in pool deck repairs; $14,569 in pool mechanical equipment. Altogether those recommended projects total $338,308, which exceeds the available unrestricted reserve by $75,000.
“These five items are not approved and not necessarily what we will do as a community will do,” explained Meyer. “This is simply to demonstrate some of the recommendations that are included in the Reserve Study.”
The restricted reserve account would total $636,559 in FY 2013. The Reserve Study recommends $436,038 in road repairs in 2013, which would leave a balance of $200,521.
Dues increase likely in future years
“This year kind of hurt a little bit because of the reduction in income, but operating expenses continue to march upward,” said Meyer. “Our dues have been relatively flat, with our last dues increase, not roads-related, going back at least five or six years.”
“We are doing everything we can to sharpen our pencil and do things less expensively, but we cannot overcome that expenses are rising," he said. "We may be looking seriously at a dues increase.”
Historically, Meyer said, the Association has opted to ratchet up dues in a stair-step fashion. That is, waiting until funding becomes tight and then going up, as opposed to setting an incremental percentage increase each year.
“It is pretty clear that we will need to do something in the next year or two,” Meyer concluded.
